loan to son

[nebous]

What is the name of your state (only U.S. law)? Maryland

How can we help to our son with $240k to purchase home without triggering some kind of tax? He will repay us over 10 years in equal semiannual payments of $12k each.

 

[FlyingRon]

Can't see what tax issues are involved here. Neither of you are deriving any income and as long as he pays it back, all is fine. If he fails to pay it back, then you will probably have to consider that a gift to him,but even then, there's probably not much tax liability.

 

[tranquility]

I don't see how you can get around the imputed interest rules on gift loans. Perhaps, if there is great trust between everyone, *you* buy the house and then do a lease/option with the son. If properly structured, you might not need to report any income at all and may even take a loss. See a tax professional for help.

 

[irsos]

I don't see how you can get around the imputed interest rules on gift loans. Perhaps, if there is great trust between everyone, *you* buy the house and then do a lease/option with the son. If properly structured, you might not need to report any income at all and may even take a loss. See a tax professional for help.

At least $24,000 per year of interest can be considered a gift.

 

[tranquility]

At least $24,000 per year of interest can be considered a gift.

Actually, $26,000. (It's 2009 now.) If parents are married and kids are married, we could probably go up to $52,000. But, since the loan is above 10K (and above 100K so the rules minimizing the amount of imputed interest don't apply), Code Section 7872 and the regs at 1.7872 would apply and interest would be imputed as income to the lender.

 

[ShyCat]

And don't allow yourself to be a part of any mortgage fraud by pretending it's a gift (for purposes of obtaining a mortgage) rather than a no-interest loan.

 

[irsos]

Actually, $26,000. (It's 2009 now.) If parents are married and kids are married, we could probably go up to $52,000. But, since the loan is above 10K (and above 100K so the rules minimizing the amount of imputed interest don't apply), Code Section 7872 and the regs at 1.7872 would apply and interest would be imputed as income to the lender.

Thanks for the update.